President Bola Tinubu has approved the cancellation of a substantial portion of legacy debts owed by Nigerian National Petroleum Company Limited, wiping off about $1.42 billion and ₦5.57 trillion from obligations due to Nigeria’s Federation Account.
Okay News reports that the approval was documented by the Nigerian Upstream Petroleum Regulatory Commission, Nigeria’s upstream oil and gas regulator, in its October 2025 revenue report presented at a Federation Account Allocation Committee meeting held on November 18, 2025.
The directive clears legacy debts accumulated by NNPC Ltd up to December 31, 2024, resolving long-standing disputes between the national oil company and the Federation, while liabilities arising from 2025 operations remain subject to ongoing monitoring.
According to the NUPRC, debts earlier reported at the October FAAC meeting stood at $1.48 billion and ₦6.33 trillion, covering production sharing contracts, direct sale direct purchase arrangements, royalty arrears, and lifting-related obligations.
Following the presidential directive, about $1.42 billion and ₦5.57 trillion of those obligations were officially cancelled, with the commission confirming that all accounting entries reflecting the decision have been fully implemented in the Federation Account.
The regulator said the approval followed recommendations from the Stakeholder Alignment Committee on the Reconciliation of Indebtedness between NNPC Ltd and the Federation, which reviewed royalty and lifting-related liabilities accumulated up to the end of 2024.
Despite the clearance of legacy obligations, fresh debts from 2025 operations persist, with statutory liabilities from January to October 2025 totaling $56.8 million and ₦1.02 trillion, according to the same report.
The data also highlights persistent revenue shortfalls, with November 2025 royalty collections of ₦605.26 billion falling far below the ₦1.14 trillion target, contributing to a cumulative revenue gap of ₦5.65 trillion as of the end of November.
Analysts say the move represents a significant fiscal reset that removes historical bottlenecks in revenue reconciliation, but caution that recurring shortfalls underscore deeper structural challenges in Nigeria’s oil and gas revenue framework.
While the debt cancellation offers relief to the Federation Account and clarity on past liabilities, experts note that sustained fiscal discipline and stronger oversight of NNPC Ltd will be critical to improving collections and preventing new arrears from accumulating.
